Calcutta High Court (Appellete Side)
Enforcement Directorate vs Shri Shailesh Kumar Pandey And Another on 9 February, 2023
Author: Tirthankar Ghosh
Bench: Tirthankar Ghosh
D/L3 C.R.R.263 of 2023
09.02.2023
Bpg./ KS
In Re: An application under Section 482 read with Section 401 of the
Code of Criminal Procedure;
Enforcement Directorate, Kolkata Zone-II
Versus
Shri Shailesh Kumar Pandey and another
Mr. Phiroze Edulji,
Mr. Samrat Goswami.
...for the petitioner.
Mr. Sekhar Basu,
Mr. Milon Mukherjee,
Mr. Ayan Bhattacherjee,
Mr. Jakir Hossain,
Mr. Md. Maqsood Alam,
Ms. Ahie Arma,
Ms. Ritu Das,
Mr. Suman Majumder.
...for the opposite parties.
The present revisional application has been preferred
challenging the order dated 21.01.2023 passed by the learned
Judge-in-Charge, Special CBI Court -I, Bichar Bhawan, Calcutta in
ML Case No.01 of 2023 arising out of ECIR No.ECIR/KLZO-
II/21/2022 dated 21/10/2022.
The grievance of the petitioner/Enforcement Directorate
were to the manner in which the production warrant which was
issued on 18.01.2023 by the Learned Special Court was recalled
and the accused persons were directed to be set at liberty.
Mr. Edulji, learned advocate appearing for the
petitioner/Enforcement Directorate submits that the ECIR/KLZO-
II/21/2022 was registered by the Enforcement Directorate based on
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the First Information Report registered being Hare Street Police
Station Case No.290/2022 dated 14.10.2022 under Sections
120B/420/467/ 471 of the Indian Penal Code on the basis of a
complaint lodged by Canara Bank officials.
Learned advocate appearing for the petitioner draws the
attention of the Court to the application under Section 267 of the
Code of Criminal Procedure filed by the petitioner against the
opposite parties namely, Shailesh Kumar Pandey and Prasenjit Das.
In respect of opposite party no.1 Shailesh Kumar Pandey
paragraphs 10 and 11 of the application under Section 267 of
Cr.P.C. are relevant which are set out as follows:-
"10. That, during investigation, public money
amounting to more than Rs.108 crore has been credited into the
account of TPG Techno Service bearing account
no.3306201002020 maintained with Canara Bank. Further
from the said account, huge amount of Rs.90,00,000/- have
been transferred in different trenches to the account of Shailesh
Pandey, which is evident from the bank account statement of
TPG Techno Service and a gist of the same is annexed as
Annexure - B."
11. That, based on investigation conducted so far, it
has been established that the accused Shailesh Kumar Pandey
is involved in the commission of offence of money laundering, by
indulging in criminal conspiracy with several other persons, to
obtain proceeds of crime with the aim of converting the illegal
money into legitimate money. He has knowingly indulged,
assisted, involved and is a party in the process and activity
connected to the proceeds of crime including its concealment,
possession, acquisition, use and projecting and claiming the
said proceeds of crime as untainted property deriving illegal
monetary gains and hence, has committed offence of Money
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Laundering u/s 3 of Prevention of Money Laundering Act, 2002
punishable under section 4 of the said Act."
In respect of opposite party no.2 Prasenjit Das
paragraphs 9, 10 and 11 of the application under Section 267 of
Cr.P.C. are relevant which are set out as follows:-
"9. That during investigation, it has also been revealed that
more than 200 accounts were opened in various Banks, to
collect the scam money and further route the same, to utilize it
for the personal gains, of the scamster/accused.
10. That during investigation, it has been revealed that
Prasenjit Das is the Director of various companies like Nexateq
Innovation Pvt. Ltd., Avonarc Infra Pvt. Ltd., Govanta Agro Pvt
Ltd, Actileaf Agro Pvt Ltd, Verozi Hotels and Hospitality Pvt Ltd,
TPG Commercials Pvt Ltd., wherein huge public funds have
been transferred/credited into the accounts of aforementioned
companies and subsequently these funds have been used for
purchase of movable/immovable properties for their personal
use/gain.
11. That, based on investigation conducted so far, it has been
established that the accused Prasenjit Das is involved in the
commission of offence of money laundering, by indulging in
criminal conspiracy with several other persons, to obtain
proceeds of crime with the aim of converting the illegal money
into legitimate money. He has knowingly indulged, assisted,
involved and is a party in the process and activity connected to
the proceeds of crime including its concealment, possession,
acquisition, use and projecting and claiming the said proceeds
of crime as untainted property deriving illegal monetary gains
and hence, has committed offence of Money Laundering u/s 3
of Prevention of Money Laundering Act, 2002 punishable under
section 4 of the said Act."
Learned advocate emphasized that custody of the
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opposite parties are required on the following grounds:-
(a) To ascertain the trail of proceeds of crime involved in the present
case;
(b) To ascertain further beneficiaries of the aforesaid proceeds of
crime involved in the present case;
(c) To ascertain the role of the other alleged/suspected persons
involved in the above said laundering of proceeds of crime;
(d) To identify the properties (immovable/movable) acquired from
proceeds of crime by the accused persons.
Records reflect that on 18.01.2023 the Learned Special Court
was pleased to issue production warrant directing the
Superintendent, Presidency Correctional Home, Alipore to produce
the accused/opposite parties physically on 21.01.2023.
Learned advocate appearing for the Enforcement Directorate
submits that on 21.01.2023 when the accused persons were
produced before the Learned Special Court, the petitioner filed
application under Section 167(2) of the Code of Criminal Procedure
read with Section 2(1)(na) and Section 65 of PML Act, 2002 thereby
praying for 15 days custody on the grounds which were earlier
canvassed before the same Court. Learned advocate criticized the
order of the Learned Special Judge passed on 21.01.2023 thereby
holding the registration of M.L. Case No.1 of 2023 to be inadvertent
mistake, recalling the production warrant, rejecting the prayer of
the Enforcement Directorate for custody of the accused persons and
directing the Superintendent, Presidency Correctional Home for
releasing the accused persons, if they are not wanted in connection
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with any case.
Mr. Edulji, learned advocate submits that once the
production warrant was executed, the Learned Special Court had no
authority to recall the same and foundation of the said order is on a
mis-reading of the judgment of the Hon'ble Supreme Court passed
in Vijay Madanlal Choudhary & Ors. Vs. Union of India & Ors.
reported in 2022 SCC Online 929. Learned advocate also relied
upon paragraph 48 of Directorate of Enforcement Vs. Deepak
Mahajan & Anr. reported in (1994) 3 SCC 440 in order to
emphasize on the issue of 'custody' and 'arrest'. Paragraph 48 so
relied upon by the learned advocate is set out as follows:-
"48. Thus the Code gives power of arrest not only to a police
officer and a Magistrate but also under certain circumstances or
given situations to private persons. Further, when an accused
person appears before a Magistrate or surrenders voluntarily,
the Magistrate is empowered to take that accused person into
custody and deal with him according to law. Needless to
emphasize that the arrest of a person is a condition precedent
for taking him into judicial custody thereof. To put it differently,
the taking of the person into judicial custody is followed after
the arrest of the person concerned by the Magistrate on
appearance or surrender. It will be appropriate, at this stage, to
note that in every arrest, there is custody but not vice versa and
that both the words 'custody' and 'arrest' are not synonymous
terms. Though 'custody' may amount to an arrest in certain
circumstances but not under all circumstances. If these two
terms are interpreted as synonymous, it is nothing but an ultra
legalist interpretation which if under all circumstances accepted
and adopted, would lead to a startling anomaly resulting in
serious consequences, vide Roshan Beevi [1984 Cri LJ 134 :
(1984) 15 ELT 289 : 1983 MLW (Cri) 289 (Mad)] ."
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Learned advocate for the Enforcement Directorate also
relies upon Deepak Gupta Vs. Enforcement Directorate of India
ABLAPL No.9695 of 2022 downloaded from the official website of
the Orissa High Court paragraph 24 of the said judgment so relied
upon is set out as follows:-
"24. It is clear that the meaning of the word 'custody' has to be
taken with reference to the context in which it is used. The
question as to what would constitute arrest and custody has
been the subject matter of decisions of different High Courts. This
issue was grappled with by the Full Court of the High Court of
Madras in the case of Roshan Beevi v. Joint Secretary to
Government of Tamil Nadu reported in 1983 SCC OnLine Mad
163, wherein the Hon'ble High Court was pleased to observe as
follows:
"16. From the various definitions which we have extracted
above, it is clear that the word 'arrest', when used in its
ordinary and natural sense, means the apprehension or
restraint or the deprivation of one's personal liberty. The
question whether the person is under arrest or not, depends
not on the legality of the arrest, but on whether he has been
deprived of his personal liberty to go where he pleases. When
used in the legal sense in the procedure connected with
criminal offences, an arrest consists in the taking into custody
of another person under authority empowered by law, for the
purpose of holding or detaining him to answer a criminal
charge or of preventing, the commission of a criminal offence.
The essential elements to constitute an arrest in the above
sense are that there must be an intent to arrest under the
authority, accompanied by a seizure or detention of the person
in the manner known to law, which so understood by the
person arrested. In this connection, a debatable question that
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arises for our consideration is whether the mere taking into
custody of a person by an authority empowered to arrest
would // 18 // amount to 'arrest' of that person and whether
the terms 'arrest' and 'custody' are synonymous.
xxx
37. For all the discussions made above, we hold that 'custody'
and 'arrest' are not synonymous terms. It is true that in every
arrest there is a custody, but not vice versa. A custody may
amount to an arrest in certain cases but not in all cases but
not in all cases. In our view the interpretation that the two
terms 'custody' and 'arrest' are synonymous is an ultra
legalist interpretation, which if accepted and adopted, would
lead to a startling anomaly resulting in serious
consequences."
Mr. Basu and Mr. Mukherjee, learned senior advocates
representing the accused/opposite parties resisted the submission
of the Enforcement Directorate and reasoned that the order dated
21.01.2023 passed by the Learned Special Court was on the basis
of a precedent pronounced by the Hon'ble Supreme Court in Vijay
Madanlal Choudhary (supra). According to the learned senior
advocate the finding of the Learned Special Court are based on the
ratio settled by the Hon'ble Supreme Court. Reliance was placed on
J. Sekar alias Sekar Reddy Vs. Directorate of Enforcement
reported in 2022 SCC Online SC 561 and attention of the to
paragraph 23 which is set out as follows:-
"23. In view of the aforesaid legal position and on analysing the
report of the IT Department and the reasoning given by CBI while
submitting the final closure report in RC MA1 2016 A0040 and
the order passed by the adjudicating authority, it is clear that for
8
proceeds of crime, as defined under Section 2(1)(u) of PMLA, the
property seized would be relevant and its possession with
recovery and claim thereto must be innocent. In the present case,
the Schedule Offence has not been made out because of lack of
evidence. The adjudicating authority, at the time of refusing to
continue the order of attachment under PMLA, was of the opinion
that the record regarding banks and its officials who may be
involved, is not on record. Therefore, for lack of identity of the
source of collected money, it could not be reasonably believed by
the Deputy Director (ED) that the unaccounted money is
connected with the commission of offence under PMLA.
Simultaneously, the letter of the IT Department dated 16-5-2019
and the details as mentioned, makes it clear that for the currency
seized, the tax is already paid, therefore, it is not the quantum
earned and used for money laundering. In our opinion, even in
cases of PMLA, the Court cannot proceed on the basis of
preponderance of probabilities. On perusal of the Statement of
Objects and Reasons specified in PMLA, it is the stringent law
brought by Parliament to check money laundering. Thus, the
allegation must be proved beyond reasonable doubt in the Court.
Even otherwise, it is incumbent upon the Court to look into the
allegation and the material collected in support thereto and to
find out whether the prima facie offence is made out. Unless the
allegations are substantiated by the authorities and proved
against a person in the court of law, the person is innocent. In the
said backdrop, the ratio of the judgment of Radheshyam
Kejriwal [Radheshyam Kejriwal v. State of W.B., (2011) 3 SCC
581 : (2011) 2 SCC (Cri) 721] in paras 38(vi) and (vii) are aptly
applicable in the facts of the present case.""
Learned senior advocate appearing for the opposite
parties has also relied upon paragraph 467(v)(d) of Vijay Madanlal
Choudhary (supra) wherein it was held as follows:-
"467(v)(d) The offence under Section 3 of the 2002 Act is
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dependent on illegal gain of property as a result of criminal
activity relating to a scheduled offence. It is concerning the
process or activity connected with such property, which
constitutes the offence of money-laundering. The Authorities
under the 2002 Act cannot prosecute any person on notional
basis or on the assumption that a scheduled offence has been
committed, unless it is so registered with the jurisdictional
police and/or pending enquiry/trial including by way of
criminal complaint before the competent forum. If the person is
finally discharged/acquitted of the scheduled offence or the
criminal case against him is quashed by the Court of competent
jurisdiction, there can be no offence of money-laundering
against him or any one claiming such property being the
property linked to stated scheduled offence through him."
Lastly, it was submitted on behalf of the
accused/opposite parties that the Enforcement Directorate cannot
pursue an investigation until and unless a finality is attained in
respect of the criminal proceedings and to that extent according to
the opposite parties the order of the Learned Special Court dated
21.01.2023 is based on settled principles of law.
I have taken into account the submissions of the learned
advocates appearing for the petitioner/ED as also that of the
accused/opposite parties and I have also assessed the order passed
on 21.01.2023 by the Learned Special Court. On an assessment of
the said order I find that the said order was based on paragraphs
456, 457 and 458 of the judgment of the Hon'ble Supreme Court in
Vijay Madanlal Choudhary (supra) wherein the Hon'ble Supreme
Court was drawing an analogy between ECIR vis-à-vis FIR in the
background of furnishing copy of ECIR to the person apprehending
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arrest or after their arrest. The same has no application to the
situation dealt with by the Learned Special Court. It was incumbent
upon the learned Special Court to take into account paragraphs
323, 324 of the said judgment which are set out as follows:
"323. In the context of this provision, the challenge is that in
absence of any formal complaint being filed, arrest under
Section 19 is being made by the authorised officers. Whereas,
the purport of Section 167 of the 1973 Code would suggest that
the person can be arrested by the jurisdictional police without
warrant under Section 41 of the 1973 Code only upon
registration of a complaint under Section 154 of the 1973 Code
in connection with cognizable offence or pursuant to the order of
the Court. Even, in case of arrest pursuant to the order of the
Court, a formal complaint against such person accusing him of
being involved in commission of an offence is essential.
Moreover, the person produced before the Court would be at a
loss to know the grounds for arrest unless a formal FIR or
complaint is filed accusing him about his involvement in the
commission of an offence. The provision if interpreted to permit
the authorised officer to arrest someone being involved in the
commission of offence of money-laundering without a formal
complaint against him, would be ex facie manifestly arbitrary
and unconstitutional.
324. This argument clearly overlooks the overall scheme of
the 2002 Act. As noticed earlier, it is a comprehensive
legislation, not limited to provide for prosecution of person
involved in the offence of money-laundering, but mainly
intended to prevent money-laundering activity and confiscate
the proceeds of crime involved in money-laundering. It also
provides for prosecuting the person involved in such activity
constituting offence of money-laundering. In other words, this
legislation is an amalgam of different facets including setting up
of agencies and mechanisms for coordinating measures for
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combating money-laundering. Chapter III is a provision to
effectuate these purposes and objectives by attachment,
adjudication and confiscation. The adjudication is done by the
Adjudicating Authority to confirm the order of provisional
attachment in respect of proceeds of crime involved in money-
laundering. For accomplishing that objective, the authorities
appointed under Chapter VIII have been authorised to make
inquiry into all matters by way of survey, searches and seizures
of records and property. These provisions in no way invest
power in the Authorities referred to in Chapter VIII of the 2002
Act to maintain law and order or for that matter, purely
investigating into a criminal offence. The inquiry preceding filing
of the complaint by the authorities under the 2002 Act, may
have the semblance of an investigation conducted by them.
However, it is essentially an inquiry to collect evidence to
facilitate the Adjudicating Authority to decide on the
confirmation of provisional attachment order, including to pass
order of confiscation, as a result of which, the proceeds of crime
would vest in the Central Government in terms of Section 9 of
the 2002 Act. In other words, the role of the Authorities
appointed under Chapter VIII of the 2002 Act is such that they
are tasked with dual role of conducting inquiry and collect
evidence to facilitate adjudication proceedings before the
Adjudicating Authority in exercise of powers conferred upon
them under Chapters III and V of the 2002 Act and also to use
the same materials to bolster the allegation against the person
concerned by way of a formal complaint to be filed for offence of
money-laundering under the 2002 Act before the Special Court,
if the fact situation so warrant. It is not as if after every inquiry
prosecution is launched against all persons found to be involved
in the commission of offence of money-laundering. It is also not
unusual to provide for arrest of a person during such inquiry
before filing of a complaint for indulging in alleged criminal
activity. The respondent has rightly adverted to somewhat
similar provisions in other legislations, such as Section 35 of 12 FERA and Section 102 of Customs Act including the decisions of this Court upholding such power of arrest at the inquiry stage bestowed in the Authorities in the respective legislations. In Romesh Chandra Mehta532, the Constitution Bench of this Court enunciated that Section 104 of the Customs Act confers power to arrest upon the Custom Officer if he has reason to believe that any person in India or within the Indian Customs waters has been guilty of an offence punishable under Section 135 of that Act. Again, in the case of Padam Narain Aggarwal533, while dealing with the provisions of the Customs Act, it noted that the term "arrest" has neither been defined in the 1973 Code nor in the Penal Code, 1860 nor in any other enactment dealing with offences. This word has been derived from the French word "arrater" meaning "to stop or stay". It signifies a restraint of a person. It is, thus, obliging the person to be obedient to law. Further, arrest may be defined as "the execution of the command of a court of law or of a duly authorised officer". Even, this decision recognises the power of the authorised officer to cause arrest during the inquiry to be conducted under the concerned legislations. While adverting to the safeguards provided under that legislation before effecting such arrest, the Court noted as follows:
"Safeguards against abuse of power
36. From the above discussion, it is amply clear that power to arrest a person by a Customs Officer is statutory in character and cannot be interfered with. Such power of arrest can be exercised only in those cases where the Customs Officer has "reason to believe" that a person has been guilty of an offence punishable under Sections 132, 133, 135, 135-A or 136 of the Act. Thus, the power must be exercised on objective facts of commission of an offence enumerated and the Customs Officer has reason to believe that a person sought to be arrested has been guilty of commission of such offence. The power to arrest thus is circumscribed by objective considerations and cannot be 13 exercised on whims, caprice or fancy of the officer.
37. The section also obliges the Customs Officer to inform the person arrested of the grounds of arrest as soon as may be. The law requires such person to be produced before a Magistrate without unnecessary delay.
38. The law thus, on the one hand, allows a Customs Officer to exercise power to arrest a person who has committed certain offences, and on the other hand, takes due care to ensure individual freedom and liberty by laying down norms and providing safeguards so that the power of arrest is not abused or misused by the authorities. ....""
Having considered the aforesaid observations of the Hon'ble Supreme Court, I am of the opinion that the interpretation of the learned Senior advocate appearing for the opposite parties that ECIR can be registered only after finality is attained in a criminal proceeding is not acceptable to this Court.
Taking into account the provisions of Section 19(3), Section 45 (Explanation), Section 46, Section 65 and Section 71 of the PMLA Act, 2002 read with paragraph 324 of the judgment of Vijay Madanlal Choudhary (supra), I hold that the foundation, finding and conclusion of the order dated 21.01.2023 passed by the Learned Special Judge is bad in law and the same as such is set aside.
Accordingly, CRR 263 of 2023 is allowed.
Mr. Edulji, learned advocate appearing for the ED on 08.02.2023 pointed out that when the revisional application was filed before this Court the accused/opposite parties were in custody 14 in connection with Hare Street Police Station Case No.290/2022 dated 14.10.2022, although it was represented before this Court that the accused/opposite party during the pendency of the present revisional application will not pursue the remedy for bail before the Learned CMM Court, Calcutta on 06.02.2022 and 07.02.2023, they were released on bail in spite of the Enforcement Directorate informing the Learned CMM, Calcutta regarding such representation. Learned senior advocate appearing for the accused/opposite parties in his usual fairness submitted that they were not informed of such development and stated that the accused/opposite parties would appear before this Court on 09.02.2023.
Today, it has been informed that the accused/opposite parties are present before this Court.
Accordingly, the Enforcement Directorate is directed to take both the accused persons in custody and produce them before the Learned Special Court by 3 p.m. advancing their prayers for custody, if required.
Pending applications, if any, are consequently disposed of.
All parties shall act on the server copy of this order duly downloaded from the official website of this Court.
(Tirthankar Ghosh, J.)